Hard Luck in Heritage Heights

Renters in Eastside Housing Project Feel Misled, Misused by the City

Deborah Thompson and one of her four children (Photo By Jessica Chapman)

Deborah Thompson moved into East Austin's Heritage Heights subdivision in March 1994 with a vision of home ownership. She and her four children were the first people to live in their new gray-and-brick two-story home, one of 26 in the low-income development between the Huston-Tillotson College campus and the Texas State Cemetery.

Thompson was going through a transition in her life at the time. Getting over a divorce, supporting her family through temp work, she was looking for an affordable option. She thought she'd found exactly that and more after talking to a property representative of Heritage Heights. Thompson was told that after renting the house at a subsidized price for 15 years, she would be able to purchase it for $1.

Affordable housing in Austin at this time was becoming a scarce commodity. According to an Austin Equity Commission report released in the summer of 2001, average rents during the 1990s increased 68%, and there was an extreme unmet need for homes priced below $91,000. So Thompson knew that she was lucky.

What she didn't know was that the rent-to-own offer was not provided for in the actual lease she signed. She also didn't know -- and, she says, wasn't told -- that the Austin Housing Finance Corporation, the housing agency of the city of Austin, had abandoned the offer months before she moved in. Thompson only learned this when, eight years after moving into Heritage Heights, in early 2002, she perused the state housing agency's archives for indications of why her rent was going to increase significantly.

Thompson has been told by other Heritage Heights residents that they too believed they were renting-to-own their homes. Several changes in the management of and rules governing the project have added to their frustration, and many are anxious about their future. "I'm trying to get my rent paid, [and] I'm frustrated because I'm finding out all of these things. ... I just felt like I shouldn't have had to go through what I had to go through in order to stay here," Thompson says.

"The Doors to Homeownership"

Strained relations between residents, city officials, and the Housing Authority of the City of Austin, which currently manages the property, have become the norm, the residents say. They cite slow response times to their household problems and inconsistent handling of their concerns by management staff and city officials, which make them even more frustrated over not being able to own their homes in an attractive, convenient East Austin location close to where some of them grew up and have extended family. Tenant Sophia Ledesma says, "I just feel like I've been misled, no communication. I feel like they're not complying [and] informing me as to what I need to know."

Heritage Heights was originally SCIP I -- Austin's first Scattered Cooperative Infill Project. (The Anderson Hill project between 11th and 12th streets, beset over the years by its own share of problems, was SCIP II; SCIP III was never completed.) The AHFC distributed glossy brochures for SCIP emblazoned with the slogan "Opening the doors to homeownership ..." and touted the rent-to-own program in exchanges with state and federal officials. Austin procured nearly $250,000 in federal low-income-housing tax credits for SCIP I.

"I didn't find out that we were not going to own these homes until maybe a year and a half ago when I brought it up," says Ledesma, one of whose adult children is also a renter at Heritage Heights. Their neighbor Bonnie Gonzales Botello says she was informed of the possibility of home ownership when she moved to Heritage Heights in 1999, a full six years after the program was supposedly changed. They and Thompson say other neighbors in Heritage Heights were told the same thing when they moved in. Indeed, according to Gonzales Botello, one brand-new Heritage Heights resident -- who she believes works for HACA -- has told friends that he's renting-to-own his home.

According to the AHFC's Martin Gonzalez, the rent-to-own option "was not feasible. ... It was an idea that didn't pan out." City housing officer Paul Hilgers, who has overseen AHFC since 1996, goes a little further, telling the Chronicle, "It's absolutely true that there were documents back in 1991 and that [rent-to-own] was the original intent of the program. But at the time they agreed to the leases they currently hold, the terms had changed."

Because the original 150-home SCIP project was never built out -- Heritage Heights currently has 44 homes -- both the actual construction cost and the debt service on the project turned out to be much greater than planned when the rent-to-own program was first conceived. A document addressed to Heritage Heights tenants from the AHFC in 1998 says, "... it was not fair to make purchasers [of other SCIP homes, such as those in Anderson Hill] pay 30 years on a mortgage in order to own their own home, while renters could pay $1 and become owners at the end of 15 years." Hilgers, who says he thought the city had already cleared up its issue with the Heritage Heights tenants, notes, "We told them that they didn't actually have this right, and though I'm sorry for the confusion, that's not [in the lease] you actually signed."

The AHFC says, after the demise of the rent-to-own option, it met with the tenants and presented an alternative: Tenants would have first right of refusal to buy their property at the end of 15 years. Ledesma and Gonzales Botello knew nothing of this meeting -- Thompson, who had recently had a child, was unable to attend -- and the AHFC acknowledges in a March 2003 letter to Thompson that "no agreements were returned." "So in other words, we said 'OK, if you're not going to give us the homes at the end of 15 years for a dollar, we don't want anything'? That doesn't even make good sense," Thompson observes. She adds that, as she has heard from residents who attended the meeting, it was only to discuss a first-right-of-refusal option, and the AHFC never followed up.

"There's No Peace"

Local housing activist Ken Altes says history plays a role in the current problems of SCIP I. "The saddest thing is that it's the opposite of what [SCIP] says," he says, adding there's nothing "scattered" or "cooperative" about Heritage Heights or other SCIP projects. Many of the properties that became home to Heritage Heights had been razed pursuant to a city urban-renewal plan for the Blackshear area adopted in the 1970s; the SCIP I developers moved off what was left. "Heritage? They scraped away heritage with a bulldozer," Altes says.

Affordable housing, either rental or ownership, remains a challenge in Central East Austin. The market value of the Heritage Heights homes, and even more so of the land they sit on, has ballooned; according to Travis Central Appraisal District records, the Heritage Heights land value alone has nearly doubled. The tax credits that helped finance Heritage Heights require the project to remain affordable to low-income residents for 30 years. But the most recent guidelines for Heritage Heights, adopted earlier this year, raised the minimum rent in the project nearly $150 a month, to $525, which is not far below market rent. While the original SCIP plans presumed that renters like Thompson, Gonzales Botello, and Ledesma would be eligible for Section 8 housing certificates -- which they would gladly accept -- these were not obtained when Heritage Heights was built and the rent-to-own program still viable, because (according to correspondence at the time between city officials) the Section 8 vouchers wouldn't help the potential homeowners build equity in their properties.

Thompson is now a full-time student, putting her older children through college and sending her youngest to kindergarten. She knows her prospects of home ownership are dim, and she's concerned. Though her month-to-month worries persist, she has turned her situation into an opportunity to learn about the city's housing programs and their effects on East Austin residents. She and several other ACC students used the Heritage Heights issue as a sociology class project last spring, and she and Ledesma have been active in the neighborhood, talking to other residents about their particular situations. Thompson has also been attending monthly meetings of the city's Community Development Commission, which has been responsive, she says, to her concerns.

She hopes others don't have to go through the exhaustive months-long odyssey of paper and people shuffling to get any straight answers. "What I think is, because things change so often" in the management of city housing programs, Thompson says, "I don't think the issue has ever been fully, fully addressed. The reason it keeps resurrecting itself is because there's no peace about it, and until it's resolved it will just be there. It just has to be dealt with."

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